Kroger reports strong Q2 results, raises full-year guidance
Propelled by its lead with Fresh and accelerating with digital strategy, Kroger delivered strong Q2 results.
The retailer's identical sales without fuel increased by 5.8%. Operating profit was $954 million; adjusted FIFO operating profit was $1.1 billion.
Earnings per share in the second quarter were $1 adjusted EPS for the quarter was .90 cents.
The company's Our Brands identical sales for the quarter increased 10.2%, and the retailer's digital sales for the second quarter grew 8%.
Total company sales were $34.6 billion in the second quarter, compared to $31.7 billion for the same period last year. Excluding fuel, sales increased 5.2% compared to the same period last year.
Gross margin was 20.9% of sales for the second quarter. The FIFO gross margin rate, excluding fuel, increased 2 basis points compared to the same period last year.
"This result reflected our ability to effectively manage product cost inflation through strong sourcing practices while helping customers manage their budgets and keeping prices competitive," Kroger said.
The LIFO charge for the quarter was $148 million, compared to a LIFO charge of $47 million for the same period last year, driven by higher product cost inflation primarily in grocery.
"Kroger delivered strong second quarter results propelled by our Leading with Fresh and Accelerating with Digital strategy,” said Rodney McMullen, chairman and CEO of Kroger. "We are incredibly thankful for our dedicated associates who continue to deliver a full, fresh and friendly customer experience. Our consistent performance underscores the resiliency and flexibility of our business model, which enables Kroger to thrive in many different operating environments."
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McMullen added," We are applying technology and innovation to improve freshness, grow Our Brands, and create a seamless shopping experience so our customers can get what they want, when and how they want it, with zero compromise on quality, selection and affordability.”
He continued, “We will continue to focus on providing affordable, fresh food to our customers, investing in wages and the associate experience, and creating zero hunger, zero waste communities because when we do those things well, we deliver attractive and sustainable shareholder returns."
"Our second quarter results provide another proof point that Kroger has the right go-to-market strategy,” said CFO Gary Millerchip.
[Read more: Kroger looking to fill 20K positions]
Millerchip added, “Our consistent execution of this strategy is building momentum in our business, which, combined with sustained food at home trends, gives us the confidence to raise our full-year guidance."
Millerchip said that Kroger now expect identical sales without fuel to be in the range of 4% to 4.5% and adjusted net earnings per diluted share in the range of $3.95 to $4.05. "Our business model has proven to be resilient in a variety of operating and economic environments and we remain confident in our ability to deliver attractive and sustainable total shareholder returns of 8-11% over time," he said.